Waxman Gears Up for Health Care Showdown

Posted on Aug 25, 2009

By Bill Boyarsky

By the time Congress returns from its recess and takes another whack at the health insurance mess, Rep. Henry Waxman, D-Calif., will have started revealing the deceit that protects health business profiteers.

Waxman has already begun by demanding that major insurance companies reveal how much they pay top executives and board members and, most important, the size of their profits from selling policies.

He is getting to the heart of the health insurance debate. It’s all about the health business—insurance, hospitals, pharmaceutical and biotech companies, medical equipment makers and others.

Their economic goal is bigger profits. Their political goal is to protect their interests by making sure the 2010 election puts enough Republicans and sympathetic Democrats in Congress. Even if the Democrats retain control of the House and Senate, health care lobbyists will pour celebratory drinks as long they have enough power to shape legislation. That’s how it works. Don’t be deluded by party labels.

Last week, I talked to Waxman about what’s happening in health care. I found him at UCLA, at a forum on another of his interests, preventing climate change.

If you’re a reporter looking for a hot quote, Waxman’s the wrong man to see. Anyone watching his “Daily Show” appearance with Jon Stewart could tell you that. Waxman is all policy, determined to explain everything in detail. But he’s smart, tough and knows how to get results. He showed that last year when he went against the House seniority system and took over the Energy and Commerce Committee by unseating John Dingell, its longtime chairman.

I asked Waxman whether he expected the insurance companies to reply to his letters. “Oh yes,” he said. “When we write letters, we expect to get answers.” And what was his purpose in seeking the information? At first, he was reluctant to discuss the investigation. Finally, he gave a guarded reply: that many folks perhaps take too benign a view of private insurance companies.

Perhaps his findings will open their eyes.

The letters from Waxman and his colleague, Bart Stupak, chairman of the House Oversight and Investigations Subcommittee, went to every major insurance company, ranging from Aetna to Wellpoint. The lawmakers want to know the pay, stock options, perks, incentives, and retirement and other financial information of executives earning more than $500,000 a year. They are curious about the cost of promotional junkets. They are seeking disclosure of premiums, revenue, claims payments and sales expenses for health insurance policies. This includes sales to employers, individuals and the government. Interestingly, while insurance companies rail against the federal government, they earn money from participating in a number of federal programs, such as Medicare.

Hopefully, the investigation will also reveal more about another source of insurance company and hospital revenue—their monopoly status. Professor Jacob Hacker of Yale shed some light on this last week with the release of a detailed paper on pending congressional health care plans.

Hacker cited an American Medical Association study which said that in 314 metropolitan areas in the United States, 94 percent have one or two insurers dominating the market. The same is true for the hospitals. Hacker reported that one or two hospitals dominate the market in 83 percent of metropolitan areas.

And the hospitals and insurance companies work together. He said insurance companies pay monopoly or prestigious hospitals “well above costs” to ensure they will work with the big firms. And costs, he noted, “are often excessive” because of hospital inefficiency.

Hacker’s paper makes a strong case for giving people the option of being covered by a government health insurance plan that would compete with private plans.

Such a plan would break the insurance companies’ monopoly and probably interfere with their collusion with hospitals. Those seeking insurance wouldn’t have to be held hostage to high private insurance rates. They could join the government plan, or not join it, having the option of shopping among the private plans for something more to their taste. But whatever they choose, the government plan would assure choice—and a yardstick with which to judge the private plans.

The reform bill approved by Waxman’s committee provides for a government plan. But the health business is mobilizing for a fight on the House floor and has already all but wiped out the government option in the Senate.

They have an effective representative, Tom Daschle, whose role in the fight was explained in a New York Times piece last weekend. Daschle, the former Senate Democratic leader, had to withdraw from his nomination as health secretary because he didn’t pay all his taxes.

He is an expert on health care. He is a well-paid adviser to hospital, drug, pharmaceutical and other health industry clients represented by the law and lobbying firm that employs him. He is an adviser to President Obama and to members of the presidential health insurance team. Most important, he favors nonprofit insurance cooperatives in the reform package, rather than the government plan. The government plan, he said, will never pass the Senate.

It’s unclear how these health insurance cooperatives would work. Some of them now exist. Small business owners, writers, farmers and others have banded together in organizations to bargain with insurance companies for coverage. The cooperatives, however, would probably be so small, scattered and weak they would provide little competition to the big insurance companies.

Obama’s stand is, to be charitable, unclear. “We think that the key is cost control,” he said last week. “That’s the end that we’re seeking. And the means—we can have some good arguments about the best way to achieve it.”

The best solution would be government health insurance—Medicare for all. But that’s a tough sell in Congress, and Waxman didn’t include it in his reform bill. Advocates of that system, along with those who back an optional government plan, gathered outside the UCLA building where Waxman was speaking at the climate change forum. Marcia Schneider, a nurse, brought a group of government option supporters with her to Los Angeles from Southern California’s Simi Valley. She said they wanted to show they “had Henry’s back on health reform. He has been leading the charge and we appreciate that.”

Waxman told me “I think there will be” a health reform measure passed this year. “I think you will get a better picture when we get back in September.”

That’s the time to watch. Will the winner be the health industry and its man Tom Daschle, moving with insider ease between the Senate and the White House? Or will it be the dogged Waxman, the man who beat the legendary John Dingell for committee chair last year?

Watch: Protesters call for health care reform in a demonstration on Friday at UCLA, where Rep. Waxman was co-hosting an event about climate change.